Why Has Amway Invested 100s of Millions of Dollars in U.S. Manufacturing? It’s Not Altruism

In this Presidential election, companies that cut their labor costs by engaging in offshoring have come in for heavy criticism. Amway, one of the world’s largest direct selling companies, is a U.S. headquartered global company would be hard to criticize on these grounds. Many of their products that are largely sold overseas, actually leverage “Made in America” as a key selling point. The company’s biggest market for their nutrition, beauty, and home products is China; and they have strong sales throughout Asia; the U.S. accounts for a mere 10 percent of their business. The company has located a majority of its manufacturing facilities in three cities in the U.S. And Amway has invested $335 million in manufacturing upgrades over the past four years, a majority of which was spent here in the U.S. Amway Opens a New $81 Million Facility in Michigan And when they do decide to manufacture some products abroad, labor costs don’t drive the decision. In many of their product categories, 80 to 85 percent of the cost of their finished goods is in raw materials and components. Labor represents just 6 to 10 percent of their total product costs. Why has Amway invested so much in US manufacturing? It is not altruism. George Calvert, the Chief Supply Chain and R&D Officer at Amway, recently described to me the reasons for the onshore vs. offshore choices they make. Dr. Calvert has a Ph.D. in Chemistry and led the R&D department before also being put in charge of Amway’s supply chain. To understand the choices, you have to understand the business. He explained that the products developed to be sold for the direct sales model need to be different from any others on the market. “We develop products with specific deliverables that are unique. These products, what […]